Gulfstream Looking At Next Evolution Of Product Line

While Gulfstream added a longer-range “ER” G650 to its growing product line during the 2014 European Business Aviation Convention and Exhibition, the Savannah, Ga., manufacturer is widely expected to unveil its next major new product, or product family, later this year.

Analysts have long believed that the next aircraft to roll out will be successors to Gulfstream’s venerable 450/550 line. At the same time, though company President Larry Flynn isn’t ruling out development of a larger aircraft.

Analyst JPMorgan recently noted company performance bears watching as Gulfstream “moves closer to new product announcements, likely in second half we believe, as the bridge from the current 450/550 products to the new ones in the 2015/early 2016 range will be an important moving part in earnings.”

But Phebe Novakovic, chairman of Gulfstream parent General Dynamics, maintains that the company is committed to the G450/550 for a number of reasons. First, any new product will take a number of years to get to market. Second, those aircraft are still strong sellers. Order activity strengthened in the latter part of last year and the 550 outsold all of the company’s other models in the first quarter.

Despite the wide speculation on the next-in-line 450/550, Gulfstream officials have remained quiet on what’s next in line for them. But at the same time, when asked whether Gulfstream would go larger, Flynn would only say the company is “always looking” at options. He adds that when Gulfstream announces an aircraft, the company will ensure there is a market for it. Except for the G150 midsize aircraft, Gulfstream’s product line has remained in the sweet spot of the business aviation market, with deliveries jumping nearly 50% last year to 144. “We’re at the end of the market where it only went down 10%,” Flynn says. “We like where we are.”

Gulfstream has evolved significantly from the one-aircraft company it was two decades ago. That changed when it unveiled the original 550 predecessor, the GV, beginning a head-to-head competition with rival Bombardier on range. The company later went smaller with its acquisition of the Israel Aircraft Industries Astra and Galaxy product lines, which have evolved into what are now the G150 and G280.

But rather than pushing lower, Gulfstream decided to move the boundaries of range, developing what became its largest, fastest and most expensive plane, the G650. It also flew the farthest, until Gulfstream added a sixth option, the ER version.

The G650 was the company’s most successful launch of a new product, with a backlog that extended seven years. “It’s done incredibly,” says Scott Neal, senior vice president for worldwide sales and marketing, adding it created a new market. Sales are picking up again now that its backlog has been whittled down to about three years, he adds.

Gulfstream plans to continue selling both the G650 and ER versions, with Neal noting they are offered at different price points and some may not need the range. In fact, it’s speed that appears to matter most to Gulfstream customers, Neal and Flynn agree. With the 650, Neal says, “they are flying as fast as they can.”Cessna Aircraft, which had claimed the speed title until the 650 snatched it away, is poised to retake it once its Citation X+ is certified in the next several weeks.

That aircraft will be certified to fly at Mach 0.935, besting the 650’s maximum speed of Mach 0.925. But the 650 is believed to have brushed up against Mach 1 in testing. Gulfstream officials are remaining mum on how fast the plane will actually fly.

What they do say is there is a point of diminishing returns on speed beyond the low Mach 0.9s, with a performance penalty that negates benefits of the speed. That is the typical response when queried on whether they are planning a plane that will return the speed title to Gulfstream. But at the same time, they haven’t stated categorically that the next plane or planes won’t go even slightly faster.

Gulfstream has also had a background in supersonic research. Flynn notes that the company continues to invest “in a very small way.” But both Flynn and Neal believe regulatory barriers are preventing it from reaching the market for the foreseeable future. Such a product would only be viable if it would be permitted to fly over land, the executives maintain.

As for the lighter end of the market, Flynn and Neal are both pleased with the progress of sales of the G280 now that it is in the market. The company has now placed 31 280s into service since it was certified in late 2012, and interest remains strong. “That end of the market is instant gratification,” Flynn says. “When that aircraft got certified, the orders started [flowing] in.”

Neal adds that its entry into service has been among the smoothest of all of its aircraft, adding that reliability rates already are matching those of the 450/550. He credits that to the decision to embed product support early in the development cycle. Gulfstream took that approach with both the 280 and 650.

As for the 150, Flynn is more pointed, saying, “We’re happy with the 150. We’re not happy with the 150 market.” The midsize market remains a difficult one, with sales not as strong. Neal indicated that this is not an end of the market where the company is focusing its research and development dollars.

At the same time, Neal reiterates that “we’re pretty comfortable with what we’re doing now.”